Tuesday, September 25, 2007

About drug patents

"One of our key points was that drug treatment for the poor would actually cost the donor world much less than appeared to be the case from drug prices in the rich countries. Under the patent system, antiretroviral medicines are priced far above their actual cost of production. The companies can price in this manner because the patent gives them a temporary monopoly. The economic theory is that the profits that result from high patent-protected prices are the incentive for the companies to engage in research and development in the first place. Still, with the actual production costs of an antiretroviral regimen at $500 per year or less (compared with U.S. market prices of around $10,000 per year), it would be possible to provide access to the poor with donor help, assuming that drug companies would supply the low-income markets at production cost rather than monopoly prices. This turned out to be the case. The patent holders agreed to cut their prices in the low-income markets, while various generic drug manufacturers provided additional competition by offering low-priced competitor drugs in countries where patents did not apply or where they were circumvented by special procedures."

(Jeffrey Sachs, "The end of poverty, economic possibilities for our time", chapter "The voiceless dying: Africa and disease")

What I like is that patent holders agreed to cut their prices in low-income countries (although it may be simply by economic reasoning: lower prices for people with lower incomes means more clients, hence maybe more benefits than from higher prices but fewer clients). It reminds me of a story I read in "80 hommes pour changer le monde" by Sylvain Darnil and Mathieu Le Roux, where an Indian ophtalmologist, Dr. Govindappa Venkataswamy, founded an hospital where the poor could be treated for free, while the rich had to pay the regular price, in exchange for more comfort (e.g. a private room), but the quality of treatments was the same for everybody. His hospital was economically viable and did not rely on donations nor subventions. And they did not ask the patients to prove if they were poor. Excellent, no ?

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